What Every Manufacturer Should Consider BEFORE Starting A Boiler Conversion Project

For a great many industrial plants, it just makes sense to convert old coal fired boilers to natural gas for a multitude of reasons.  Regardless of what drives those decisions at your facility, the cost of such a conversion project is always closely correlated to the necessary thermal output capacity for the converted boiler.

Unfortunately, many teams fast-track projects like these before optimizing steam demand, thus forming an incomplete picture of both cost and ROI.

An optimized steam demand means a reduced conversion cost;  and less capital in the front prepares for an outcome of greater sustained financial success over the short and long term.  Quite often we see instances of brilliant engineering and energy teams overlooking one simple fact: That the best way to reduce energy cost is to use less energy.  Thus, they design the boiler conversion project to meet (and sometimes exceed) consistently obsolete steam demand metrics.

The power of conversion projects lies in the reutilization of existing boiler and burner assets, at a fraction of the cost of an entirely new natural gas boiler system and generally with only a marginal difference in efficiency.  In both boiler conversion and replacement projects, the team must first account for the amount of thermal energy that is required for the facility, and the volume of natural gas supply required to produce this energy at both a daily level and on a peak hourly basis.

If you have not optimized your steam demand, both conversions and new installations WILL require more capital.  Here’s why:

Project Requirement Why It’s Important Why Optimization Matters
Supply Infrastructure: New or upgraded natural gas supply pipeline as well as associated equipment (pressure regulation, measurement and controls, gas heater, odorizer, safety valves, remote communications, etc.) will be required. The smaller the capacity requirements, the lower the overall costs for piping and associated infrastructure. For many industrial boiler conversion projects, a new high pressure 4” to 8” gas pipeline may be needed for many miles to connect to the nearest reliable source of natural gas. Costs can range up to $1M per mile and are directly impacted by the size of the pipeline required.  The smallest pipeline that meets your needs is better for your project financials.
Pipeline Capacity: Demand charges paid to utilities and interstate pipelines for firm transportation of natural gas to your site are on a per MMBtu basis. Many pipelines require a commitment of up to 10 years for the reservation of each MMBtu of firm pipeline capacity. The less volume of natural gas required, the lower the demand charges.
Commodity price volatility: Commodity pricing is an uncontrollable variable that can sap profitability very quickly. Overconsumption acts as a multiplier to price increases. When less fuel is required to achieve the same output, price spikes are far less noticeable on the bottom line.
Greenhouse Gas (GHG) Emissions: Environmental responsibility and stewardship are simply expected in today’s business environment. When you burn less, you emit less.

So don’t be afraid to advocate for sidelining the pending conversion of a coal or an oil boiler at your facility in order to undergo a conscientious demand reduction exercise.  In this process, your team should commit to:

  • Being honest about your operation and the opportunities that may exist.
  • Connecting with outside resources to assist with your evaluation as needed.
  • Optimizing energy consumption and establishing a baseline BEFORE endorsing capital projects.

Two Critical Keys for Eliminating Utility CIP Program Fees.

Where State and Federal programs exist to encourage energy reduction to meet financial, environmental and social objectives, we often find Utility Energy Efficiency Programs and Conservation Improvement Programs (CIP) which favor energy efficiency standards for all customers, regardless of size or customer class.  These CIP programs are funded via a fee or rider added to the customers’ monthly energy bill; however it is common to discover large customer opt-out provisions which may offer major energy users like industrial facilities the option of self-directing their energy efficiency initiatives.

Most states recognize the value of a self-directed efficiency opt-out versus a total opt-out for large customers.  Here is our list of currently known states that allow for an opt-out of CIP or provide for a self-directed energy conservation or demand response management program:

  • Arizona
  • Arkansas
  • Colorado
  • Connecticut
  • Idaho
  • Illinois
  • Indiana
  • Kentucky
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • New Jersey
  • New Mexico
  • North Carolina
  • Ohio
  • Oklahoma
  • Oregon
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

We’ve found a couple of critical keys for ensuring success in your opt-out initiative:

  1. Evidence that ongoing legitimate energy conservation initiatives are being implemented via a self-directed and continuously functional energy reduction program complete with an accountability structure.
  2. Your anecdotal energy reduction actions must include measurable, verifiable, and significant energy savings.

Armed with these, your opt-out efforts can’t help but bear fruit.

 

Source: American Council for an Energy-Efficient Economy

Implementing a demand-side energy reduction initiative with the help of MPC Energy will allow a large industrial facility meet a number of objectives:

  • Reduce energy consumption and associated emissions.
  • Meet the Utility CIP Opt-Out and eliminate the Utility CIP fees.
  • Save 10 to 15% of energy costs without the need to allocate capital dollars.
  • Provide reports and verified results that can be submitted to the utility commission to meet opt-out requirements.
  • Establish a culture of consumption awareness and accountability.
  • Achieve ISO50001 compliance.

Contact MPC Energy

…to discuss how your facility can opt-out of utility CIP programs and still implement an energy reduction program that will support both regulatory requirements and your financial goals.